We recently profiled Credit Suisse and Deutsche Bank, two behemoth financial names with prominence in Europe but all over the world. These are two major league banks in the euro zone, similar in nature to our own Bank of America and Citigroup. And yes, they do fall into that category of ‘too big to fail’, whether we like it or not. A failure of any of these banks could have catastrophic consequences for the world economy – so most in charge don’t even want to go close to failure.
Some years ago Credit Suisse and Deutsche Bank smartly diversified their portfolios by attaining some US bank assets. These were not huge names – CS bought First Boston some years ago and DB bought broker Alex Brown and then the custody chain Banker’s Trust. These were medium-sized banks that gave these euro banks a footprint in the US markets.
The issues within the eurozone are well documented and the challenges they face are quite large. However, the health of their biggest banks are crucial to a strong recovery in the biggest economic area on the planet. Not long ago some were pointing toward a massive failure to come for Deutsche Bank and many investors were looking at a massive dissolution. It seems that may have been averted, and perhaps better days are ahead for these big euro banks.
